PayPal, the leading digital payment platform, has announced the launch of a U.S. dollar-pegged stablecoin, PayPal USD (PYUSD), to facilitate seamless transactions between fiat and digital currencies. PYUSD is supported by deposits in U.S. dollars, short-term U.S. Treasury securities, and other similar cash equivalents. It can be exchanged for U.S. dollars at a 1:1 ratio.
Stablecoins are digital tokens that are pegged to a fiat currency or other assets to maintain a stable value. They are designed to reduce the volatility and risk associated with cryptocurrencies while offering the benefits of speed, cost, and programmability of blockchain technology.
Stablecoins have the potential to transform payments in web3 and digitally native environments, such as virtual reality, gaming, and social media. PYUSD is issued by Paxos Trust Company, a regulated entity that also provides custody and compliance services for PayPal’s cryptocurrency offerings.
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PYUSD is an ERC-20 token that runs on the Ethereum blockchain, making it compatible with the most widely used exchanges, wallets, and web3 applications. PYUSD will also be integrated with the PayPal ecosystem, allowing customers to buy, sell, transfer, send, and fund purchases with PYUSD.
Dan Schulman, president, and CEO of PayPal, said:
“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar. Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PYUSD.”
Starting today, PayPal USD is now available and will be gradually introduced in the United States, except for Hawaii, over the next few weeks. Customers can learn more about PYUSD at the official website.
PYUSD is part of PayPal’s broader vision to increase consumer and merchant understanding and adoption of digital currencies, stablecoins, and central bank digital currencies (CBDCs) while working closely with regulators as the industry evolves, or so they claim.